Lots of news in the last few days about the costs of doing business and discovering drugs. Which mostly seem to say that the industry is really not doing as well as it used to be doing.
Matthew Herper blogged on the decline in productivity in the pharmaceutical industry (including a graph which has been doing the rounds in the blogosphere). The bottom line conclusion is that the number of new drugs (New Molecular Entities or NMEs) produced per billion dollars is on a steady decline and has been since the 1950s, which is more or less the beginning of the pharmaceutical industry. Perhaps it is not surprising therefore that the industry reduced its R&D spending for the first time last year. Perhaps it is surprising that it hasn’t happened before now.
Then there was news from Pharmalot about the vaunted new model for Big Pharma in which greater emphasis is placed on licensing in new drugs rather than wasting money trying to find them in-house. It seems that while it might look good on paper, the trouble is that the in-house projects have a significantly better chance of making it to the marketplace.
There are several arguments to be made for why all this has come to pass. Greater regulatory hurdles, tougher targets, a pool of available medicines that actually work quite well. All of these and other reasons for why it is harder to get a project to go from its beginning to reach a marketable product. But it seems to me that this is the new reality and the industry needs to adjust to this new dawn.
A big part of the problem is that Big Pharma has gotten big on the lucrative and highly profitable drugs that are racing toward what they call the patent cliff, where the generics lurk, waiting to drag down their profits. But it is not like those products are now entirely lost to them. They still have the process in place to keep making those now generic products and they will still make money selling them. They had the glory years of higher prices and those are fair enough because it does take an enormous amount of resources to bring a drug to market nowadays. But those costs should have been covered during the period of patent protection. Perhaps they can be content with just making a useful product and making a reasonable profit on it?
And it is not like the number of NMEs will fall to zero. Some new drugs will be discovered. There are still some much needed medicines to be discovered and there will no doubt be new challenges to face – new antibiotics, for example. I just think the industry has to consider the days of huge growth every year to be fanciful, that a mature and gigantic industry cannot possibly keep growing and growing.
What this means for the bench drug discovery chemist, I don’t know. I can’t see it as positive news for us, for an industry relying mostly on what it already has doesn’t need a huge R&D effort. But there will be some, because there are new things needed and that means – potentially at least – bigger profits. Those always beckon.